Pneuron CEO: The B.I. Market is a ‘Shambles,’ We Can Help

By Tiernan Ray

Pneuron CEO Simon Moss visits Barron’s offices.

Despite “everything moving to the cloud,” as the common refrain goes these days in enterprise technology, there are still young companies being born with an interest in improving the software that enterprises buy to manage their the databases, where they key the information about their customers and products that is the life blood of any company.

Case in point, five-year-old Pneuron of New York, whose CEO, Simon Moss, stopped by Barron’s offices the other day to talk about how the company is changing the market for so-called “business intelligence,” or B.I., a corner of the database world populated by numerous companies, including Tableau Software (DATA), and Informatica, which was taken private last year.

Moss had previously been head of communications software maker Avistar Communications (AVSR). But the more relevant experience is having run analytics company MantasInc., which was backed by Safeguard Scientifics (SFE), and sold in 2006 to Oracle (ORCL) for net proceeds of $113 million. Safeguard has pitched in $13.5 million in venture funding along with other backers.

“We are in a philosophical argument with the market,” Moss told me, expressing an element, if not the whole, of the company’s rallying cry in a market he sees as for many years now being an “absolute shambles” of failed projects and broken promises by software makers.

That argument goes a bit like this: Today, you can figure out trends in your business by dumping everything into what’s often called a “data lake,” a huge, indiscriminate pile of all the records you’ve amassed in your database. You sift through that pile of records to see what you find. Hadoop, for example, an open-source software tool of increasingly popularity, supported by companies such as Hortonworks (HDP), is used for that task, and some companies have seen great results with it.

Pneuron’s software is meant to handle things differently. “Things such as open source [meaning, Hadoop], and machine learning are wonderful,” says Moss, “but we deploy them in the same way we did in 1971″ with the advent of the relational database system. “We move the data to the analytics.”

What he’s referring to is the customary task of creating “data warehouses” and “data marts” and such, to corral some portion of enterprise data in a clean room of sorts, so that analysis can then be performed, or, in the case of Hadoop and the data lake, so that the deep dive can be conducted.

As Moss sees the problem,

Big Data is great if you’re Amazon or Google, and you have a massive amount of homogenous data to sift through. We are no where near the ability of these machine learning approaches to work effectively They are expected to use homogenous data, but the vast majority Of enterprise have data in multiple sources, especially as a consequence of things such as M&A. You’ve got an awesome number of silos. Companies are being told they have to spend 80 cents of every dollar not creating value but just moving that data to something like a data lake. There is a trillion dollars of application backlog, per Gartner, just waiting for that move to happen. And the average failure of projects is close to 80%, according to Forrester. Those are projects either going over budget, or just shutting down entirely. What we have are enterprises that don’t habitually have big data problems but that have data diversity problems. They’ve got all these companies coming to them, telling them, Don’t worry, we’ll help you do this. But to actually create this value, you’ve got to move all the stuff into one place. So we decided to challenge the argument of moving all the data. The market is in an absolute shambles, as companies are being sold a Big Data approach and they are going to go through the same failures as in past movements of this kind. We have been avoiding the problem of massive diversity.

Instead, Pneuron wants to “move the analytics to the data,” using individual “pneurons,” described as “micro services,” a type of application that represents an atomic query logic of some kind. It can be either run in a virtual machine or inside of a “container,” a lightweight application runtime. It connects to a production data source, such as an Oracle database. A collection of such pneurons can “hang” over the existing collection of data sources, “like a fabric,” says Moss:

What Pneuron does, as this fabric hanging over these silos, is abstract all these sources and create additional analytics, and crawls these data sources, to bring it all together in a visualization on an iPad. What Pneuron has done is pre-build all these business disciplines. We don’t want to go through the traditional bespoke tech deployment, we want to solve the business problems quickly. We do about 10% of what Informatica does, but that is all you need to start to get answers. It rakes an hour and a half to install the software, and a couple of days to learn it, and within a month our clients are independently solving problems.

These Pneurons act on questions the companies already know they want to ask. “There is a large set of problems that don’t require discovering,” as Moss describes it. The company has written 55 to 60 of these micro services, with more in development. A central scheduling authority called the “Cortex” can “spin up a new version” of any pneuron as needed.

Take a regulatory report, says Moss: “it is a multi-hundred-million dollar investment that a bank needs to make.” That’s a clear need for analytics, he contends, not for a deep dive into a data lake on a fishing expedition.

Or take something like the “Panama Papers“:

Let’s say a bank needs to review those records, and they need to do so across twelve different business lines. That would mean homogenizing all those databases, or sending the list out to all the different countries where the data sources live. But what we did is, we take a list of the entities that are presumed involved, and we just put a pneuron around it. We did this for a client, we did it in three days, and we did this against millions of accounts.

Of course, tools such as Tableau’s are already reinventing some aspects of B.I., which Moss concedes. But, “I love tableau, but they don’t deal with the hard problems” of how to extract and analyze multiple different data sources.

Part of Moss’s justification is that his approach is not only simpler, but it avoids the fate of massive projects where traditional IT tools such as Informatica’s, or what are called “ETL” languages, are used by IT to scrub the data.

But what about the shift to the public Web, I ask. If the Web is being used more and more for the basic runtime of job scheduling, in things such as Amazon’s “Aurora” database, or its “RedShift” data warehouse, why would a corporation run Pneuron’s software. Pneuron can co-exist with those public Web runtimes, says Moss. But “most of the projects we are dealing with are mission critical,” he notes, and for that reason, “some of them run in the Dark Web,” sheltered information sources, and “for that mission criticality, we need often to be behind the firewall.”

Then too, “The DBAs love what we do,” he says of those highly paid professional database administrators inside corporate offices, “because they don’t have to do repetitive reporting ten times a month, and the quality is much better than it used to be for those reports.”

“We have made the database a repository of successful analytical results.”

Pneuron is at an annual revenue run rate of $5 million, growing at 90% a year, says Moss, but although the company is just at a small stage, “we expect to be the leader in this wave of transformation.”

After Moss departs, I’m left thinking to myself, It all sounds smart, but I’m no DBA, so how should I know? It’ll take time to see whether this thing becomes a big business without creating yet another shambles.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.